Paraguay's president Santiago Peña resigns after Ueno Bank crisis

Paraguay’s rightwing President Santiago Peña resigned on Thursday after the insolvency of Ueno Bank froze the savings of millions of customers, set off mass protests and triggered impeachment proceedings against him. The 47-year-old economist had governed since August 2023 and had been due to stay in office until 2028.

The crisis centred on Ueno Bank, which the central bank ordered into resolution last Monday over insolvency. The move froze deposits belonging to 3 million customers and left hundreds of thousands of families unable to pay for food and basic daily expenses. Bank executives were arrested and large protests followed.

Ueno began as a finance company in the 1970s and was bought in 2021 by Grupo Vázquez, described as one of Paraguay’s largest business and industrial conglomerates. At the end of 2023, after Peña took office, the central bank authorised it to operate as a digital bank. It grew quickly, attracting customers with cash-back offers on groceries and sponsoring Paraguay’s national football team, and claimed about 60% of Paraguay’s adult population as customers. On Wednesday, the national team’s players released a letter demanding a “forceful response” from the government and the justice system.

The bank managed between $800m and $850m in deposits from state and pension entities, including retirement funds. That prompted criticism over possible conflicts of interest because of Peña’s previous shareholding ties to Ueno Holding. Peña said he had made an “investment” as an economist and had already sold all his shares. When local media raised possible improper favouritism in directing state and pension funds to the bank, he called it a “false media campaign” aimed at weakening his government.

On Wednesday, opposition lawmakers and some members of Peña’s Colorado party filed an impeachment motion holding him responsible for the collapse. He had been a shareholder in the group that ran the bank until early last year and, in recent months, had reportedly ignored warnings from the central bank and the media about its operations. Political pressure increased on Thursday morning when former president Horacio Cartes, a former ally, endorsed the impeachment. “We will not stand on the side of the theft of public, private and pensioners’ funds,” he wrote.

Peña then released a video announcing his resignation. “I do so thinking of the stability of our country, social peace and the need to preserve our democratic institutions,” he said, adding that he wanted to apologise if he had failed the people and that his priority was the peace of mind of Paraguayans who trusted their savings to the financial system. Since the scandal broke, he has insisted he committed no wrongdoing.

About an hour after the announcement, the lower house unanimously approved the impeachment motion, which now goes to the senate. If approved, even after his resignation, Peña would lose his senate seat and parliamentary immunity, leaving him open to criminal proceedings in ordinary courts. It remains unclear who will replace him or when: his resignation must in theory be accepted by Congress, in which case Vice-President Pedro Alliana would take over. Alliana is also suspected of involvement in the Ueno Bank scandal, which he has denied.

Opposition senator Rafael Filizzola called the case “the biggest fraud carried out from political power in the democratic era”. Peña, a former finance minister, was a key regional ally of US President Donald Trump and one of the few Latin American presidents to attend Trump’s second inauguration. US Secretary of State Marco Rubio had praised him as a “strategic partner”. Neither Rubio nor Trump had yet commented on Peña’s resignation.

Source: The Guardian World.